By Sara Zaki
"It has often been said that the UK is 20 years behind the US. This is particularly true in the anti-trust area." So says Chris Bright, the new managing partner of Clifford Chance's competition practice.
At Lovell White Durrant, competition partner Simon Polito agrees. He says UK competition law was once well ahead of its counterparts in Europe – with the exception of Germany – but has now been completely overtaken.
While the current UK regulations have changed little in the past 20 years, other EU countries have toughened-up their regimes. Competition deals with a cross-border element fall under more stringent EU and US regulation, but domestic competition law has stagnated.
The general consensus among lawyers is that the 'gentle slap on the wrist' approach to competition issues in the UK has led to severe abuses. They say UK consumers have been blighted by higher prices, less choice and poor quality.
Two items of news last week did little to improve the overall image of the UK competition market.
First it was claimed that John Bridgeman, director-general of the Office of Fair Trading (OFT), had leaked the Monopolies and Mergers Commission's (MMC) decision on the £623m BSkyB takeover of Manchester United. Bridgeman denies the accusation.
Then came the Government's announcement of an MMC inquiry into the £24bn-a-year car market – a move that was greeted with little enthusiasm; eight years ago the MMC made a raft of recommendations for the car market that were never implemented.
But times are changing and, as Bright says, the pressure on the OFT to "crack some skulls" is building. On its way through parliament is a new competition bill that is set to repeal the outdated 1976 Restrictive Trade Practices Act and the Resale Prices Act. When it comes into effect on 1 March, 2000, the new act will boost OFT powers to prohibit anti-competitive agreements, allowing it to deal with market abuse more effectively.
The OFT will have the power to conduct dawn raids on companies suspected of operating cartels and impose huge fines. The bill does not deal with merger control, but Secretary of State for Trade and Industry Stephen Byers has promised to remove the political element from decisions on deals.
The proposals have received a warm welcome from competition lawyers – although they have had to calm the nerves of some clients.
For some the fear is not unfounded. Allen & Overy competition partner Mark Friend says "illicit cartels lurking in smoke-filled rooms" should worry.
Lawyers agree the toughening up of competition law will lead to a significant increase in contentious work. Firms accused of breaching the tougher regime will have to defend themselves to the OFT.
The act will also affect third parties who believe they are suffering from unfair competition. They will be able to bring civil actions for which they can claim damages.
But Slaughter and May competition partner Laura Carstensen believes an explosion of third party litigation is unlikely. She recognises there is a huge amount of litigation of this type in the US, but says this is fuelled by huge damages awards and contingency fees.
Lawyers also fear the OFT will not have sufficient resources to exercise its new powers properly.
But at least two leading firms have their own resources to worry about. Freshfields competition partner Deirdre Trapp says finding good lawyers to cope with competition work is hard enough without increasing the workload.
She says her firm is expanding its three-partner 25-fee earner competition department and is about to promote one of its associates to a partner.
SJ Berwin & Co is poised to promote an associate too, but competition partner Ralph Cohen denies his firm is suffering from a shortage of good lawyers in this niche area.
Slaughters' competition partner Malcolm Nicholson says the changes will not require extra staff or reorganisation at his firm.
But he agrees with other competition lawyers that firms which do contentious competition work will become busier.
Lovells' Polito agrees but, like Freshfields, he believes Nicholson is a "lucky man" if his department already has the necessary expertise.
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